BTC signs project finance agreements with Azerbaijan government

The following news release was issued in Baku by BTC Co.

Baku, Azerbaijan, Feb. 3, 2004 -- The Azerbaijan Government and BTC Co, operated by BP, today hosted an official ceremony during which the final package of project finance documents was signed to finance BTC construction. The signing ceremony, which took place in the Gulustan Palace in Baku, marks the completion of agreements covering the third party financing for the pipeline project.

The BTC financing agreements were signed by representatives of the Governments of the Azerbaijan Republic, the Republic of Georgia and the Republic of Turkey and representatives from the BTC lender group in the presence of the President of the Azerbaijan Republic, H.E. Ilham Aliyev.

The financing package includes 208 finance documents, with over 17,000 signatures from 78 different parties, and it represents a major milestone in the implementation of the financing arrangements for the pipeline which will cost $2.95 billion to construct ($3.6 billion total project cost including line fill and loan interest during construction).

Approximately 30 percent of BTC costs are being funded by equity contributions, while the remaining 70 percent of the total is being provided in the form of financing by third parties. The BTC partners have already contributed $1 billion. The total debt committed is $2.6 billion thus completing the funding for the project.

The group that will provide loans, export credits and risk insurance to BTC comprises:

the multilateral lending agencies: the European Bank for Reconstruction and Development (EBRD) and the International Finance Corporation (IFC), the private sector arm of the World Bank

the Export Credit Agencies and Political Risk Insurers of seven countries: the Japan Bank for International Co-operation (JBIC) and Nippon Export and Investment Insurance (NEXI) of Japan, the Export-Import Bank of the United States of America, the Export Credits Guarantee Department (ECGD) of the United Kingdom, the Overseas Private Investment Corporation (OPIC) of the United States, Compagnie Francaise pour le Commerce Exterieur (COFACE) of France, Euler Hermes Kreditversicherungs- AG (HERMES) of Germany and SACE S.p.A. - Servizi Assicurativi del Commercio Estero (SACE) of Italy

Finalization of the financing agreements comes after more than two years of far-reaching monitoring and scrutiny of the project's environmental and social impact, as well as a thorough public consultation process. The loans are conditional on the project continuing to meet its stringent public commitments - which are subject to formal, quarterly audits by lenders.

The participation of the multilateral, export credit and insurance agencies enhances transparency in the project, and gives them the opportunity to influence project implementation, and to help ensure the development potential from the projects is realized. To date, construction work has progressed significantly with the overall project now more than 50 per cent complete. Some 760km of the right of way (ROW) has been prepared, 580km of pipe strung, 520km of pipe welded, 270km of the pipeline corridor trenched, 235 km of pipe lowered-in and 215 km already backfilled. Today, there are construction activities at 17 sites in all three countries.

The pipeline employs over 12, 000 people along its entire route from Baku to Ceyhan. The project's community investment program is up and running in all three countries. Overall BTC together with the South Caucasus Pipeline (SCP) will spend some $30 million (including $5.5 million already awarded in Azerbaijan) on community and environmental investment between now and 2006 in Azerbaijan, Georgia and Turkey.